Shares in the retailer sank 25% to 240p - the lowest level since June 2001 - as M&S also announced the departure of head of food Steven Esom and a 4.5% fall in like-for-like food sales.
M&S' unscheduled warning spooked investors already concerned about a consumer downturn, causing shares in other retailers to drop, including Tesco, Sainsbury's and Morrisons, down 5.3%, 6.5% and 3.8% respectively. M&S food supplier Uniq was also hit, with its shares falling 27p to a record low of 90p.
Analysts said the departure of Esom was “outrageous” because its clothing division had performed worse than food, while the Financial Times described Esom as the retailer's “sacrificial lamb”.
“The credibility of senior management has been irreparably damaged by both the degree of profit erosion in what was meant to be a relatively defensive company since Christmas and the lack of any clear idea from management that they have a grip of problems in either part of the business,” Tony Shiret, an analyst at Credit Suisse, told the Daily Telegraph.